Peter Witts, CPA PC

09/04/2026

Founder compensation on a federal award needs to be more than reasonable; it needs to be clearly supported.

For many SBIR/STTR companies and other federally funded startups, founders wear multiple hats. On any given week, they may be performing technical work on the award, managing the business, raising capital, pursuing commercialization opportunities, or supporting other projects.

That makes properly tracking founder compensation especially important.

In our latest article, we discuss:

✔ Aligning founder compensation with approved project effort
✔ Using timekeeping to document the work actually performed
✔ Connecting payroll records with labor charged to the award
✔ Distinguishing direct award work from indirect activities
✔ Separating fundraising and commercialization time from federally funded R&D
✔ Maintaining documentation that supports compensation charged to the award

Simply being a founder doesn’t mean all of your time or compensation; belongs to the federal award.

The key is creating a clear connection between the work performed, the time recorded, the compensation paid, and the costs ultimately charged to the project.

Building that discipline early can help strengthen cost tracking, financial reporting, and award support as the company grows.

Learn more about this topic: https://www.wittscpa.com/blogs/how-to-track-founder-compensation-on-federal-awards

Founder compensation is one of the most common gray areas for startups receiving federal funding. In many SBIR/STTR companies, the founder is not just the CEO. The founder may also be the principal...

09/01/2026

Labor is often one of the largest costs in an SBIR/STTR proposal; and one of the most important to budget realistically.

Whether the work will be performed by founders, employees, scientists, engineers, or other technical staff, labor planning should reflect more than an estimated number of hours.

Companies need to think carefully about who will perform the work, how much effort the project requires, what compensation is reasonable, and how those labor costs connect to the overall award budget.

In our latest article, we discuss:

✔ How to estimate labor needs based on the proposed scope of work
✔ Budgeting compensation for employees, founders, and technical personnel
✔ Planning employee effort across federally funded and non-award activities
✔ How payroll, fringe, and indirect costs affect the total cost of labor
✔ Why realistic labor assumptions matter after the award is received
✔ Connecting proposal labor budgets with timekeeping and actual project costs

A labor budget shouldn't simply help make the numbers fit within the funding limit.

It should reflect a realistic plan for who will perform the work and what it will actually cost your organization to deliver the project.

Getting those assumptions right during the proposal stage can create a much stronger foundation for managing labor, monitoring the budget, and supporting costs throughout award performance.

Learn more about this topic: https://www.wittscpa.com/blogs/sbir-sttr-labor-cost-planning--how-to-budget-employees--founders--and-technical-staff

Labor is often one of the largest cost categories in an SBIR/STTR budget. It is also one of the most sensitive. Founders, scientists, engineers, developers, project managers, and technical staff...

08/31/2026

An approved SBIR/STTR budget tells you how much you can spend; but it doesn’t necessarily tell you when you’ll have the cash to spend it.

That distinction is important when managing a federal award.

Payroll, subcontractors, vendors, equipment, and other project expenses may need to be paid before reimbursements or drawdowns are received. Without a clear view of timing, a project can be fully funded and still create working capital pressure for the business.

A budget-to-cash flow forecast helps connect the approved award budget to the actual movement of cash throughout project performance.

In our latest article, we discuss:
✔ How to turn an approved award budget into a cash flow forecast
✔ Planning for payroll and other recurring project expenses
✔ Forecasting vendor and subcontractor payments
✔ Accounting for drawdown and reimbursement timing
✔ Identifying potential working capital needs before cash gaps occur
✔ Updating forecasts as actual award activity changes

A strong award budget helps you plan what you'll spend. A strong cash flow forecast helps you understand when you'll need the money to spend it.

Both are important for managing an SBIR/STTR award successfully.

Learn more about this topic: https://www.wittscpa.com/blogs/how-to-build-a-budget-to-cash-flow-forecast-for-an-sbir-sttr-award

08/27/2026

Federal grant reconciliations shouldn’t be something you save for the end of the award.

For SBIR/STTR companies and other federal grant recipients, a consistent monthly reconciliation process can help identify discrepancies early, keep financial records aligned, and provide a clearer picture of how award funds are being used.

Rather than scrambling before a reporting deadline or closeout, awardees should regularly review whether their accounting records, grant activity, and supporting documentation tell the same financial story.

A monthly review may include:

✔ Reconciling grant-related transactions to the general ledger
✔ Reviewing actual spending against the approved budget
✔ Confirming payroll and labor charges are properly recorded
✔ Reviewing subcontractor, consultant, and vendor costs
✔ Verifying drawdowns or reimbursements against recorded expenditures
✔ Reviewing indirect cost allocations
✔ Identifying missing or incomplete supporting documentation
✔ Investigating and resolving discrepancies while they're still fresh

In our latest article, we provide a practical monthly checklist to help federal awardees build reconciliation into their regular financial management process.

Good grant management isn't just about meeting the next reporting deadline. It's about keeping your financial records accurate and supportable throughout the life of the award.

Learn more about this topic: https://www.wittscpa.com/blogs/federal-grant-reconciliations--monthly-checklist-for-awardees

Federal grant management is easier when the financial records are reviewed every month. For many awardees, reconciliation becomes stressful because it is treated as a reporting deadline task. The...

08/26/2026

Not every dollar your company spends belongs in the same bucket; especially when federal R&D funding is involved.

For SBIR/STTR companies and other federally funded businesses, clearly separating R&D, commercialization, and general business costs is an important part of maintaining accurate financial records and understanding which expenses belong to the federally funded project.

As companies grow beyond research and begin preparing products for market, raising capital, building sales operations, or expanding the broader business, those financial lines can become increasingly important.

In our latest article, we discuss:

✔ How R&D costs differ from commercialization and general business expenses
✔ Why clear cost classification matters for federally funded companies
✔ How project codes and a structured chart of accounts can improve cost tracking
✔ Why employee time should be allocated to the work actually being performed
✔ How better cost separation supports reporting, indirect rates, and audit readiness

Federal funding may support the development of your technology, but it doesn’t automatically mean every expense associated with growing the company belongs to the award.

Clear cost separation helps protect the integrity of your federal funding while giving management a more accurate picture of what it actually costs to operate and grow the business.

Learn more about this topic: https://www.wittscpa.com/blogs/how-to-separate-r-d--commercialization--and-general-business-costs

SBIR and STTR companies rarely work on only one thing at a time. A founder may spend the morning reviewing prototype data, the afternoon speaking with potential customers, and the evening preparing...

08/25/2026

Your SBIR/STTR budget was built before the project began; but actual project spending doesn’t always follow the original plan.

Hiring may take longer than expected. Labor needs can change. Research costs may shift. A subcontractor may cost more or less than anticipated. Or certain expenses may occur at a different point in the project.

When that happens, the key is understanding why your actual spending has changed and what those differences mean for the remainder of the award.

Regular financial monitoring can help SBIR/STTR awardees identify budget variances early and determine whether adjustments, additional documentation, or agency approval may be required.

In our latest article, we discuss:

✔ Why SBIR/STTR budgets and actual spending can diverge
✔ How budget-to-actual reporting can help identify variances early
✔ What to review when spending moves away from the original plan
✔ When budget changes may require closer attention or approval
✔ How ongoing financial monitoring can support better award management

A budget shouldn’t be something you prepare for the proposal and never look at again. It should remain an active financial management tool throughout the life of the award.

Learn more about this topic: https://www.wittscpa.com/blogs/what-to-do-when-your-sbir-sttr-budget-no-longer-matches-actual-spending

SBIR and STTR budgets are built before the work begins. At the proposal stage, companies estimate labor, materials, consultants, subcontractors, indirect costs, travel, testing, and other project...

08/24/2026

Before signing a federal award agreement, make sure you understand more than just the funding amount.

For founders receiving an SBIR/STTR award or other federal funding, the award agreement establishes the terms your organization will be expected to follow throughout the project.

Those requirements can affect how you manage costs, document employee time, invoice or draw funds, work with subcontractors, report financial activity, and maintain records.

Before signing, founders should take time to understand areas such as:

✔ The award type and period of performance
✔ Approved budget and funding limitations
✔ Allowable and unallowable costs
✔ Timekeeping and labor requirements
✔ Invoicing or payment procedures
✔ Financial and program reporting requirements
✔ Subcontractor and consultant responsibilities
✔ Record retention and documentation expectations
✔ Any special terms or conditions attached to the award

In our latest article, we discuss what founders should review before accepting a federal award; and why financial preparation shouldn't wait until after the agreement is signed.

Winning the award is a major milestone. Understanding what you're agreeing to is an important part of managing that award successfully.

Learn more about this topic: https://www.wittscpa.com/blogs/what-founders-should-know-before-signing-a-federal-award-agreement

Receiving notice that your company has been selected for a federal award is exciting. For many founders, it can feel like the hard part is over. The proposal was submitted, the technical review is...

08/20/2026

Choosing accounting software for an SBIR/STTR company isn’t just about finding a platform that can send invoices and produce financial statements.

When federal funding is involved, your accounting system needs to support a different level of cost tracking, documentation, and financial visibility.

The right software should help your organization manage the award while providing the financial information needed for reporting, compliance, and informed decision-making.

Before selecting a system, SBIR/STTR companies and federal grant recipients should consider whether it can support areas such as:

✔ Project-level cost tracking
✔ Direct and indirect cost segregation
✔ Labor and timekeeping integration
✔ Indirect rate management
✔ Budget-to-actual reporting
✔ Identification and tracking of unallowable costs
✔ Documentation and audit readiness
✔ Growth into multiple awards or funding sources

In our latest article, we discuss what federally funded businesses should consider when evaluating accounting software; and why choosing a system based solely on price or general small-business features can create limitations as your federal funding grows.

The goal isn’t simply to find accounting software that works today. It’s to build a financial infrastructure that can support your organization through future awards, reporting requirements, and growth.

Learn more about this topic: https://www.wittscpa.com/blogs/how-to-choose-accounting-software-for-sbir-sttr-and-federal-grant-accounting

Choosing accounting software is one of the first financial system decisions many SBIR/STTR companies make. Founders often ask which platform is best for federal grants, SBIR/STTR awards, or...

08/19/2026

Winning an SBIR/STTR award doesn’t always mean the cash arrives exactly when your expenses do.

During award performance, companies may still need to cover payroll, research costs, vendors, subcontractors, and other operating expenses while waiting for reimbursements or payments.

Without adequate cash flow planning, even a well-funded project can create financial pressure on the business.

That’s why managing an SBIR/STTR award requires looking beyond the total funding amount and understanding when money comes in, when expenses go out, and whether the business has enough working capital to cover the difference.

In our latest article, we discuss:

✔ Why cash flow gaps can occur during award performance
✔ How payroll and project expenses affect working capital
✔ The importance of understanding invoicing and reimbursement timing
✔ How budget-to-actual reporting can support better cash flow decisions
✔ Steps SBIR/STTR companies can take to anticipate potential funding gaps

Strong financial management isn't only about staying within your award budget. It’s also about making sure your business can continue operating while that budget is being spent.

Learn more about this topic: https://www.wittscpa.com/blogs/sbir-sttr-cash-flow-planning--how-to-avoid-funding-gaps-during-award-performance

SBIR and STTR awards can provide important non-dilutive funding for innovative companies, but funding approval does not always mean cash flow will feel easy. Many awardees still face timing...

08/18/2026

An SBIR/STTR award may be ending, but your financial responsibilities don’t necessarily end with the final project milestone.

Award closeout is an important opportunity to make sure your financial records are complete, reconciled, and organized before final reports are submitted and the project is officially closed.

Waiting until the last minute can make it harder to identify missing documentation, resolve discrepancies, or confirm that recorded costs align with the award.

Before closeout, SBIR/STTR companies should take time to review areas such as:

✔ Final project costs and budget-to-actual reporting
✔ Payroll, labor, and timekeeping documentation
✔ Subaward, consultant, and vendor records
✔ Invoices, drawdowns, and payment records
✔ Indirect cost calculations and supporting schedules
✔ Financial reports and award-related documentation

In our latest article, we share a practical financial closeout checklist to help SBIR/STTR awardees organize their records and address potential gaps before the award ends.

A strong closeout doesn’t start on the final day of the award. It starts with maintaining good financial records throughout the project.

Learn more about this topic: https://www.wittscpa.com/blogs/sbir-sttr-closeout-checklist--financial-records-to-organize-before-the-award-ends

SBIR and STTR award closeout can feel like an administrative task at the end of the project. But financially, closeout is much more than submitting final forms. Closeout is the point where the...